APAC IT budgets up, contribution value perception low

Despite the rise in IT budgets compared in 2013, most businesses in the region do not perceive technology as being able to help them innovate or differentiate, and the CEO's IT involvement is seen as critical to driving success.

SINGAPORE--While IT budgets are set to increase from last year, many businesses in Asia-Pacific, even large organizations, do not view the contribution of ICT as an innovation ordifferentiator driver, but mostly for improving business processes and delivering adequate services.

According to ZDNet Asia IT Priorities survey 2013, spending increases will be widespread with 75 percent of businesses raising their external IT spending in 2013. This is more than 60 percent who reported increased budgets in the corresponding survey last year.

Overall, respondents said their external ICT spending will increase in 2013 by 23 percent, compared to 2012. The survey, which polled 1,236 respondents in Asia-Pacific, was unveiled during a panel discussion held here on Friday.

It was also found only one in four businesses felt ICT was making a big contribution to their performance. The remaining three quarters of respondents, it was viewed as just delivering adequate services or helping to improve processes in limited ways.

The survey had organized perceptions of ICT's contributions to business performance into a 4-level hierarchy model, with the highest level being innovating followed by differentiation. The third level was improving business processes and the last level was delivering adequate services.

Respondents' perception of ICT's contribution to the business (Source: ZDNet Asia IT Priorities 2013)

Of the respondents who said ICT is contributing greatly to their businesses, 15 percent of respondents say that IT is a primary driver of innovation, transformation, design and deployment of new business models and services, while 10 percent say IT is closely aligned to the business and constantly creates a competitive advantage in the market.

Majority of respondents, at 40 percent, say ICT is merely helping make specific business processes more efficient and effective. The remaining 35 percent stated ICT is providing infrastructure and applications but focusing on delivering established services without improvements.

Even among the large organizations surveyed, only 16 percent perceived it as an innovation source while 9 percent perceive it as a differentiation source. Nearly half of them at 47 percent, perceive ICT to be delivering infrastructure, applications and databases as well as established services.

"Many respondents felt their IT capabilities are still stuck in building basic infrastructure and improving business processes, and are not getting into the space to differentiate and innovate in the marketplace," Angus Macaskill, industry analyst of CBS Interactive, who unveiled the survey findings, said.

However, one panelist Michael Conlin, chief technologist of HP's enterprise services in Asia disagreed. According to Conlin, the majority of HP's customers were multi-national corporations (MNCs) and highly value technology as a source of innovation.

The findings were typical of Asian SMBs, who are trying to "keep the lights on and focusing on the basics", and hence did not represent the views of the larger organizations well, he told ZDNet Asia on the sidelines of the event.

"For any organization looking compete in Asia-Pacific and Japan, technology definitely goes beyond the basic roles, and are looking for outcomes such as reaching new customers and growing in new markets" Conlin said.

Fellow panelist Yap Chee Yuen, CIO of Resorts World Singapore, added his company saw a blurring between innovation and improvement.

For example, if a company decides to venture into mobile payments, it is hard to decide whether to categorize it as innovation or improvement, he noted, adding different companies have differing definitions.

Increase in CEO's involvement in tech budgets

While the CIO was found to be the executive most likely to be proactively driving ICT-led innovation, the CEO was the second most involved.

The role of CXOs in driving ICT-led innovation (Source: ZDNet Asia IT Priorities 2013)

A quarter of respondents, at 25 percent stated the CEO did so to a large extent, while 22 percent say the CEO does so to a certain extent.

Organizations where CEOs were actively involved in ICT-led changes were also more likely to be performing better than those whose CEO was not, according to the survey. 33 percent of respondents felt they were significantly outperforming industry peers when the executive was involved greatly, compared to only 19 percent when he or she was not.

Yap also pointed out when it came to budgets, it was not a situation whereby each individual executive decided on the budget. The CIO still held the most authority over the overall technology budget, and its role lay in articulating the strategy and cost benefits on IT projects to other C-level executives, he explained.

"Through this partnership with various other executives, the whole organization will have a better understanding and perspective on other key projects," Yap said.

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